MERCURY SYSTEMS INC appointed William L. Ballhaus as new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


Appointment of Interim President and Chief Executive Officer; Resignation of President and Chief Executive Officer 


The Board of Directors (the "Board") of Mercury Systems, Inc. (the "Company") has appointed William L. Ballhaus as the Company's interim President and Chief Executive Officer effective as of June 24, 2023. On June 19, 2023, Mark Aslett, the Company's President and Chief Executive Officer, delivered a letter to the Board resigning from his positions of President and Chief Executive Officer and the Board has accepted Mr. Aslett's resignation effective as of June 24, 2023. Mr. Aslett has been removed without cause from his position as a member of the Board effective as of June 24, 2023. The Company has initiated a search for a permanent President and Chief Executive Officer with the assistance of a leading executive search firm. 


Mr. Ballhaus, age 55, joined the Board as a non-employee director in 2022 in connection with the cooperation agreements with JANA Partners LLC and Starboard Value LP. Mr. Ballhaus has significant experience in the aerospace, defense, and technology industries, including multiple CEO roles. He currently serves as Chairman of MilestoneRoad Partners, a business consulting firm he founded in 2021. He previously served as Chairman and CEO of Blackboard, Inc., a leading EdTech company, from 2016 until its merger with Anthology in 2021. Prior to that, he served as CEO and President of SRA International, Inc., a provider of information technology services, from 2011 until the creation of CSRA Inc. from SRA International Inc.'s and CSC's U.S. public sector business. Before that, Mr. Ballhaus served as CEO and President of government contractor DynCorp International from 2008 to 2010. Mr. Ballhaus has also held senior leadership positions at BAE Systems, Boeing, and Hughes, where he led global government and commercial technology businesses particularly focused on software and IT.


Mr. Ballhaus currently serves on several private company boards, including as Executive Chairman at Catalis, a provider of software and payments solutions for government customers, Executive Chairman at Elite, a vertical software business focused on the legal technology market, and on the Board of Directors of Qmulos, a leading cybersecurity and IT compliance company. He is also a senior advisor at PSG, a private equity firm focused on the software industry, and a Fellow of the American Institute of Aeronautics and Astronautics. 


Mr. Ballhaus holds a Bachelor's degree in Mechanical Engineering from the University of California, Davis and Master's and Doctorate degrees in Aeronautics and Astronautics from Stanford University. He also earned a Master's degree in Business Administration from the Anderson Graduate School of Management at UCLA.


In his resignation letter, Mr. Aslett cited his belief that he has experienced a good reason termination event during a potential change in control period pursuant to his change in control severance agreement ("CIC Agreement") and that he is entitled to certain equity vesting, severance, and other benefits based on his CIC Agreement. The Board disputes that Mr. Aslett has experienced a good reason termination event and believes that Mr. Aslett has resigned without good reason. 


The Company's Human Capital and Compensation Committee has engaged its independent compensation consultant to assist the Committee in preparing compensation arrangements for Mr. Ballhaus in his role as interim President and CEO. The Company will file an amendment to this Current Report on Form 8-K with a summary of such compensation once it has been approved by the independent directors. 


There are no family relationships between Mr. Ballhaus and any director or executive officer of the Company, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.


Board of Directors Appointment


The Board of Directors has appointed Gerard J. DeMuro, Co-CEO of Eve Air Mobility, as an independent director in Class II of the Board, effective June 24, 2023, for a term expiring at the 2023 annual meeting of shareholders (the "2023 Annual Meeting"). The Board has determined that Mr. DeMuro is independent under the 


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listing standards of The Nasdaq Stock Market. With the addition of Mr. DeMuro, and the departure of Mr. Aslett, three of the nine members of the Board have been added in the last year. 


Mr. DeMuro was granted a restricted stock award upon election pursuant to the Company's Compensation Policy for Non-Employee Directors. Pursuant to the policy, new non-employee directors are granted equity awards in connection with their first election to the Board. This award consists of shares of restricted stock with a value equal to $225,000 divided by the average closing price of the Company's common stock during the 30 calendar days prior to the date of grant. This award vests as to 50% of the covered shares on each of the first two anniversaries of the date of grant. Non-employee directors also receive a cash retainer of $65,000 per year, paid quarterly in arrears.


Mr. DeMuro does not have any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.


Board Chair Retiring and Not Standing for Re-election


On June 23, 2023, William K. O'Brien, the Chairman of the Board, who had previously informed the Board of his interest in retiring at the end of his term, provided formal notice that he intends to retire and will not stand for re-election at the Company's 2023 Annual Meeting of Shareholders.